EXHIBIT 97.1
GUARANTY BANCSHARES, INC.
CLAWBACK POLICY
As adopted by the Board of Directors, effective October 2, 2023
Overview
The following Clawback Policy has been adopted by the Board of Directors (the “Board of Directors” or the “Board”) of Guaranty Bancshares, Inc. (“Company”) to assist the Board of Directors in the exercise of its responsibilities. This Clawback Policy is subject to modification from time to time by the Board of Directors.
In October 2022, the SEC adopted a Final Rule, Listing Standards for Recovery of Erroneously Awarded Compensation. As a result, the New York Stock Exchange requires its publicly listed companies to adopt and disclose a related policy to address the SEC standards, which is referred to herein as a “Clawback Policy.” The Final Rule requires the Company to recover erroneously awarded incentive compensation to certain executive officers for a three year period preceding the date of an accounting restatement that would have impacted the compensation awarded to those executive officers had the accounting been reported correctly. The difference between the amount actually paid to the applicable executive officers and the amount that should have been paid to the officers will be recovered by the Company, with certain exceptions described below.
Policy Requirements and Restatement Determination
The Final Rule requires the Company to:
Under the rules, the Company is required to perform a clawback analysis when it has an accounting restatement that (1) corrects an error in previously issued financial statements that is material to the previously issued financial statements, or (2) would result in a material misstatement if the error was either corrected in the current period or left uncorrected in the current period.
The standards recognize that U.S. GAAP permits certain retrospective changes to previously issued financial statements that do not represent error corrections and, therefore, would not trigger a recovery analysis. Examples include:
Clawback Analysis
If an accounting restatement is required, the Compensation Committee of the Board of Directors will require a clawback analysis and will assign a qualified administrator of the policy to determine whether recovery of erroneously awarded incentive compensation is necessary. If the analysis determines a recovery is not required, the Company will disclose the reasons for this conclusion. The Compensation Committee, consisting entirely of independent directors, will be responsible for making the final conclusion. Documentation backing up the conclusions and calculations in the analysis will be maintained, be available to the Board of Directors and to the New York Stock Exchange as required.
The clawback analysis shall apply a well-reasoned, holistic and objective approach when assessing the error. Information will allow the Board of Directors to have an objective assessment of whether the error is material and whether there is substantial likelihood that the error would be important to a reasonable investor. If the Company determines that the accounting restatement requires clawback of previously awarded compensation, the Company shall disclose:
If recovery is determined to be impracticable and will not be pursued, the Company is required to disclose the amount of recovery forgone, and to describe why recovery is impracticable under one of the limited exceptions below.
Limited exceptions to the mandatory clawback requirements include situations where:
The Final Rule defines “incentive-based compensation” as “any compensation that is granted, earned or vested based wholly or in part upon the attainment of any financial reporting measure.” As a result, the guidance applies, but is not limited, to:
Executive Officers
The Board of Directors has defined executive officers under the scope of this Policy to be those current and former executive officers as defined under Section 16 of the Securities and Exchange Act of 1934.
[End of Policy]